Apple stock is poised to soar in 2017 for five reasons, according to Citi Research, which repeated a "buy" rating on the company.
Analyst Jim Suva gave the following list in a note to clients Tuesday, CNBC reported:
- "iPhone 8 Super Upgrade Cycle driven by newer form factors driving a stronger upgrade relative to the prior 2 cycles"
- "Tax reform benefit from reduction in corporate taxes and cash repatriation"
- "Sticky user base which drives continued services revenue growth"
- "Enterprise push mid term, Applewood longer term"
- "Attractive valuation – Shares trade at a slight discount to their 4 year median multiples despite improving fundamentals ahead"
Suva gave an Apple price target of $130. Apple stock was at $115.54, up $2.24, or 1.98 percent in late Tuesday NASDAQ trading.
Suva said Trump's proposal to lower the U.S. corporate tax rate to 15 percent from 35 percent would add 6 percent to Apple's earnings-per-share. Suva said if the company used 25 percent of any repatriation tax holiday proceeds for a stock buyback, it could benefit earnings-per-share by an additional 10 percent.
"Across our coverage universe, we see Apple as a significant beneficiary of Trump tax reforms. Apple is very well positioned to benefit from potential tax reform of either or both a repatriation tax holiday and or a lower corporate tax rate," stated the note.
"We believe iPhone installed base upgrades will take a step up with the launch of iPhone 8," Suva wrote.
The technology titan has been active on other fronts as well.
Apple has held talks about investing in a $100 billion technology fund that SoftBank Group Corp. aims to launch next year, a person with knowledge of the discussions told The Wall Street Journal.
Apple may contribute as much as $1 billion to the fund, which would give the company insight into up-and-coming technologies, said the person, who asked not to be identified because the talks were private.